The AUD/NZD is very bullish. We should see a bullish continuation. Double pattern has been broken and the price is proceeding further up.
Breakout above W H4 has made another strong move to the upside and now is all about either retest or continuation. On a retest of 1.0835 zone or 1.0910 I expect a continuation up. Even if the market drops to 1.0900 it will be a consolidation before a move up. Final target is 1.10055. It’s buy the dips scenario.
Ranges are wide this week and markets are easily capable to handle the big moves expected. Watch in particular EUR/NZD and EUR/AUD then GBP/USD.
AUD/USD and NZD/USD topside pairs NZD/CAD and AUD/CAD both broke lower and signifies its a matter of time before AUD/USD and NZD/USD break and trade much lower. Bottom pairs AUD/CHF and NZD/CHF are both overbought and assists to further downside to AUD/USD and NZD/USD.
GBP/AUD last week’s vital points were located from 1.8130 to 1.7885. This week 1.8130 to 1.7905. GBP/AUD broke 1.7885 and traded 80 pips lower. GBP/AUD correlates to GBP/USD at – 64% and caution is warranted to trade GBP/AUD.
GBP/NZD last week reported ranges from 1.9318 to 1.9176. This week 1.9318 to 1.9188. GBP/NZD last week first broke 1.9176 to trade 82 pips to 1.9094. GBP/NZD then traded above 1.9176 to achieve 1.9415 highs and closed at 1.9290 vs last week’s close at 1.9244. GBP/NZD correlation to GBP/USD run -43% and caution to this week’s trade.
EUR/USD and all EUR pairs are deeply oversold and matches to richter scale overbought to USD/JPY and USD/CHF. Moves lower to USD/JPY and USD/CHF are corrective unless 105.70 and 0.9064 breaks lower. EUR/USD higher is corrective unless 1.2020 and 1.2034 trades higher. Weeks ago was reported EUR/USD targets at 1.1800’s and 1.1700’s.
JPY cross pairs represent the best market moves for most pip gains beginning with GBP/JPY as all JPY cross pairs are overbought and current prices are miles to high.
Last post was shown GBP/JPY true moving averages and the 20 day is located at 148.38 then the 50 day at 145.26. The 20 day average matches the 10 year average at 148.36 and off by 2 pips. A break at 148.00’s then GBP/JPY larger range becomes 148.38 to 142.30.
Watch EUR/CAD higher this week, EUR/GBP oversold and GBP/USD overbought.
Next 2 and 10 year yields, levels, ranges and targets. Inflation as a 3 month interest rate and its relationship to the 2 year yield.
The AUD/NZD has been in range for more than 5 year on the monthly chart (price action hitting the 21 ema zone). Price is now showing a potential bearish breakout with 100-300 pips space.
But the Fibonacci levels could also act as support zones… Let’s review the monthly and 4 hour charts.
Price Charts and Technical Analysis
The AUD/NZD seems to be building a large ABC (blue) pattern. Although this wave outlook is fragile to the choppy consolidation zone.
If a larger wave C (blue) does occur, then price is expected to make a bullish bounce at the Fibonacci retracement levels. Price should also break above the resistance trend line (orange) if a 5 wave pattern emerges (pink).
A break below the bottom invalidates (red circle) the bullish outlook. This confirms a bearish breakout below the range and also a full downtrend.
On the 4 hour chart, price could have completed a wave 5 (purple) of a larger ABC (pink) pattern at the -27.2% Fibonacci target (green box) and 50% Fib on the monthly chart.
But price action must break above the 21 ema zone and then the 38.2% resistance Fib to confirm that (blue arrows).
A bearish breakout below the support zone (green line) or a bearish bounce at the 38.2% Fibonacci zone could confirm the bearish outlook.
It remains likely that price action will move lower to test at least the 61.8% Fib at 1.04 if not the 78.6% Fibonacci retracement level at 1.0220 on the monthly chart. Also, the -61.8% Fibonacci targets form a confluence at 1.0310.
The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter
Monday starts with a slight optimism on the major exchanges but it’s hard to call it a game-changer as the volatility is rather low and we can sense a holiday mood on the trading floors. Worry not, in this environment we were still able to find three interesting trading setups, which you may find very interesting.
First one is a small update about the AUDNZD, which we mentioned a few times at the beginning of the month. Back then, the price was testing crucial resistance on 1.085. Price was trying to close a day above that level since September 2019. In ourprevious analysis, we said that price closing a day above that resistance will be a legitimate buy signal. And it did! Since that time, we got 8 bullish days in a row and price is currently 180 pips higher, what a move! With this, the long-term sentiment is definitely positive but a chance for a short-term bearish correction is rising.
As for the NZD, we do have a very negative situation on the NZDJPY, where we broke the lower line of the rectangle, which gave us a proper sell signal. Now, we are testing the neckline as we do have a proper head and shoulders formation. Priceclosing a day below the neckline will be a super strong sell signal, especially when we will consider a weekly chart and the shooting start candlestick bouncing from the long-term downtrend line.
Last but not least is the EURPLN, which is on the verge of breaking crucial horizontalsupport – 4,4. In the shorter-term, the price created a rectangle pattern and Mondaystarts with an attack on its lower line. First attack seems unsuccessful and it actually opens a way up north based on the possibility of a false breakout pattern. One is certain here. We are getting closer and closer to a final decision, sharp breakout and a slide or a bounce.
The first instrument is traders’ beloved GBPJPY. Often chosen by speculators thanks to its volatility. For the past few days, pair was in the sideways trend, which could have been described as a descending triangle pattern. The formation was not fully reliable as the best signals it gives in a downtrend. Nevertheless, the price broke the upper line of this formation today, which in theory brings us a proper buy signal.
Now AUDNZD, which today is making a crucial long-term movement. Despite the better data from New Zealand, the price is heading higher, so NZD is getting weaker. The reason why this movement is important is that the price is currently testing major long-term horizontal resistance. Buyers are testing this level since September 2019 and they did not manage to close the day above the 1.084 resistance. Price closing a day above, can be a proper buy signal.
The last one is French CAC, which is getting ready for a bullish wave. The price created an inverse head and shoulders pattern and already broke its neckline. What is more, CAC broke the mid-term down trendline and the horizontal resistance on 4900 points. As long as we stay above this level, the sentiment remains positive.
The AUD/NZD is in uptrend. Bullish head and shoulders pattern marks a potential continuation to the upside.
1.0700-20 zone is showing buyers and a “slingshot” trade. The market is above the middle Bollinger Band (daily BB) and its gaining momentum to the upside. We should see a bounce off the zone and a potential move to 1.0759 and 1.0771. Above 1.0771, 1.0804 is the target. If W L3 holds, this scenario is likely to happen.
The AUD/NZD has formed another leg in technical uptrend and we should see a continuation move up. My entry is 1.0635 and we are still going up.
Much better than expected Australian and Chinese Trade Balance data reflected positively on the AUD crosses. Trade Balance represents the difference in value between imported and exported goods and services during the month. POC zone is 1.0625-35 so we are seeing the bounce. The first target is 1.0677. If the market closes above 1.0680, then 1.0754 should be the next.
Today let’s start our analysis with an update from Poland; The number one spot on the stock exchange is now occupied by a gaming company called CD Project. You probably recognize some of the games they’ve released like ‘The Witcher’ and ‘Cyberpunk2077’. It’s interesting to see that in these times, usual conglomerates such as Orlen, an oil & gas company or KGHM, one of the biggest copper and silver producers in the world are no longer helming the stock exchange.
Back to our usual assets, oil surged yesterday after U.S. president Donald Trump commented that an agreement between Saudi Arabia and Russia may happen. This is in line with the technical situation; as we mentioned yesterday, the price was above the 21.1 USD/bbl. level, so there’s a good chance for a short-term upswing. What will happen now is based on speculation, but keep in mind, traders just bought the rumor, so we can base our next moves on what we think they will do with the facts.
Next, we’re moving onto a rather unusual pair for our analysis, the AUDNZD. The pair has shown an interesting setup on the weekly chart, where the price is currently creating a shooting star. The place of this candle is not random; after an earlier test, the price created this candle under two important resistances – the dynamic and the horizontal one. Based on all the above, the pair is looking at a long-term negative sentiment.
Lastly let’s take a look at the Dollar Index; it has shown us that appetite for the USD is back. The price used the inverse head and shoulders patter to come back above the 38,2% Fibonacci retracement level. Buyers are not stopping and it seems that they are aiming to hit the 23,6% Fibonacci level. Based on the current momentum, they should hit it soon.